After trying to bail out Wall Street and Big Banks the old fashioned way (i.e., just hand them Federal money with few or no strings attached) suddenly Federal Reserve Chairman Ben Bernanke has decided it might be wise to take steps to put the brakes on all those foreclosures of all those mortgages that only God knows who owns anymore:

WASHINGTON, Dec 4 (Reuters) – U.S. Federal Reserve Chairman Ben Bernanke on Thursday urged more aggressive action to halt home foreclosures, and said write-downs of principal may need to be part those efforts.

“Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high, with adverse consequences for both those directly involved and for the broader economy,” he said at a Fed conference on housing and mortgage markets. “More needs to be done.”

Bernanke said evidence that homeowner equity is an important determinant of default rates points to a need to write down loan principal to help people stay in their homes.

“Principal write-downs may need to be part of the toolkit that servicers use to achieve sustainable mortgage modifications,” he said.

The Fed chairman said a number of proposals — all using public funds — hold promise for slowing foreclosure rates.

These include a Federal Deposit Insurance Corp plan that would reward participating lenders by sharing the cost of defaults on restructured loans. The FDIC, the bank regulatory agency that manages the fund that insures bank deposits, says the plan would prevent 1.5 million foreclosures.

Bernanke also said a program aimed at putting delinquent borrowers into new home loans insured by the Department of Housing and Urban Development’s Federal Housing Administration might attract more participants if the Treasury Department bought securities issued by Ginnie Mae.

Memo to Ben: you’re a little late to this party. Many, many people have been proposing the government take action to limit foreclosures, with a foreclosure moratorium the idea that I find the most likely to have any immediate impact.

Your speaking up now strikes me as too little and too late to have much effect, and the steps you champion are unlikely to be accomplished so long as President Bush keeps his cold dead hand on US economic policy (or lack thereof). I believe he and his lackey Henry “The Tone Deaf” Paulson have already deep-sixed the FDIC plan you spoke so glowingly about. And I don’t see any financial institution with securitized mortgage backed assets voluntarily writing down the value of their holdings no matter how crappy we all know they really are. But at least future generations will acknowledge your attempt at CYA.

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